Page 2235 - Week 08 - Wednesday, 5 June 2013

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Wednesday, 5 June 2013

MADAM SPEAKER (Mrs Dunne) took the chair at 10 am and asked members to stand in silence and pray or reflect on their responsibilities to the people of the Australian Capital Territory.

Payroll Tax Amendment Bill 2013

Mr Smyth, pursuant to notice, presented the bill and its explanatory statement.

Title read by Clerk.

MR SMYTH (Brindabella) (10.02): I move:

That this bill be agreed to in principle.

There is at present a widely held view within the business and legal community that the territory’s payroll tax legislation and the administration of it is still out of step with other jurisdictions, particularly New South Wales. The extent of this has been made clear to me through my interactions with the ACT business community, and it has been concerning to hear that a number of these businesses have considered moving their operations across the border to New South Wales.

At a time when business confidence is decreasing as a result of this government’s mismanagement of our economy, it is understandable that businesses moving interstate is not a good thing for the ACT. In this regard the amendment bill that I am tabling in my name today seeks to address this from the perspective of improving the ACT’s payroll tax legislation to make it more equitable and give businesses greater certainty in establishing their true tax position.

In this regard my amendments today seek to give greater clarification to the Payroll Tax Act on matters pertaining to discretionary trusts, retrospective degrouping, the breadth of degrouping, and joint and several liability. At present, under sections 72(6) and 74, beneficiaries of a discretionary trust are grouped with other beneficiaries of the trust and the trustee. This can have the perverse result whereby individuals are grouped without their knowledge or consent by being appointed beneficiary. This is a matter where people could be grouped for many years and be liable for tax accordingly without knowing.

In most instances, at law gifts can be disclaimed retrospectively, and this would alleviate the issue of grouping without consent and/or knowledge. However, in the ACT, there is no clear-cut practice to allow for disclaiming retrospectively, and in cases brought to ACAT, the territory has argued that this practice is tantamount to tax avoidance.

The outcome of the present legislation surrounding discretionary trusts is that if a trust is declared listing certain beneficiaries and these beneficiaries are not made known of their position accordingly for, let us say, 10 years, the beneficiaries’ ignorance is irrevocable unless the commissioner chooses to exercise his power to degroup.

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